Deal may be close in Boeing probes

Aerospace company negotiating penalties

April 26, 2006|By Ameet Sachdev, Tribune staff reporter.

A settlement of two federal criminal investigations into Boeing Co.'s defense business is being held up by the size of the fines the aerospace giant would pay to end the cases, according to a published report.

The Wall Street Journal, citing anonymous sources familiar with the details, said a comprehensive agreement is close to being finalized in which Chicago-based Boeing would not face criminal charges. The company has signaled it may be willing to pay about $500 million, while some Justice Department officials are seeking at least $750 million, the newspaper said.

The public airing of the negotiations is unusual and signals to some industry observers that Boeing may be trying to gain some leverage to limit the penalties it likely will have to pay.

"I think Boeing is showing what their top line is," said Keith Ashdown, a defense expert with Taxpayers for Common Sense, a government watchdog group. "When you hear $500 million fine, the average American will say that's pretty good."

A Boeing spokesman declined to comment on the specifics of the negotiations, except to say that the company has "stayed engaged" with the Justice Department and prosecutors "in a constructive way as we continue to work through the issues."

A Justice Department spokesman did not return a call seeking comment.

A settlement would help Boeing put behind defense-related scandals that have dogged the company for the past few years.

Boeing's legal troubles date to 2003, when the company was suspended from launching military rockets because it had thousands of proprietary documents from rival Lockheed Martin Corp. in its possession when bidding on the launch contracts.

The suspension was expected to be temporary, but it stretched almost two years as Boeing became involved in a second scandal over a $24 billion Air Force contract for aerial refueling tankers. That contract was thrown out by Congress in 2004 after a former Air Force procurement official, Darleen Druyun, admitted she had increased the price as a "parting gift" to Boeing, where she went to work after retiring.

Federal prosecutors in Virginia charged Druyun and Boeing's former chief financial officer, Michael Sears, with criminal conduct and both pleaded guilty. They have completed their prison sentences.

Without a settlement, Boeing could face charges ranging from fraud to stealing a competitor's secrets, as well as related civil claims brought by the Justice Department.